[dboreham]

> if a company is shutting down, it obviously can't provide severance

Not really true. The company is owned by its shareholders, and they may choose to use funds belonging to the company (after paying outstanding obligations) to pay severance, or they may divide the funds among themselves. If there are no funds, they can choose to invest more to pay severance. Obviously they're unlikely to want to do that, but it's not a case of "can't" but rather "won't".

[JumpCrisscross]

> they may choose to use funds belonging to the company (after paying outstanding obligations) to pay severance

If they can do this, they can pay salaries another month. Making a go/no go call at the edge is difficult. It sounds like Convoy thought it was getting a loan that didn’t come through.

Put another way: if the CEO shut down the company while loan negotiations were in place, it would have zeroed out the common stock while giving preferred investors a pay-out (in addition to everyone some severance).

[sangnoir]

> If they can do this, they can pay salaries another month

If leadership decides to use the remaining funds on salaries rather than severance - then they should be judged on that! What good is buying one extra month for a doomed company? That month is more valuable to individual employees who can use it to look for new jobs

[JumpCrisscross]

> What good is buying one extra month for a doomed company?

You don't know it's doomed. Plenty of companies have turned around while running on fumes. This is fundamental to start-ups.

> month is more valuable to individual employees who can use it to look for new jobs

Everyone who lost their jobs at Convoy is eligible for unemployment. The same unemployment most workers get when they're fired. Perhaps the discussion should be around improving this benefit for everyone?

[sangnoir]

> You don't know it's doomed.

It's swell when people gamble with employees well-being on the miniscule odds of a miracle. And even better idea is to offer severance, and those employees with the same appetite for risk can get additional options from the folks who leave. That'd be a win/win, except for the leadership who would rather gamble using other peoples chips but keep most of the winnings.

> Everyone who lost their jobs at Convoy is eligible for unemployment

Unemployment benefits don't come anywhere close to tech salaries! They take time to process.

> Perhaps the discussion should be around improving this benefit for everyone?

We can multitask. What is in my power to control is to avoid working with anyone associated with this decision and encourage everyone else to do the same - board-members and the entire C-Suite. We have a - let's call it poor culture fit

[JumpCrisscross]

> It's swell when people gamble with employees well-being on the miniscule odds of a miracle

You don't know the odds ex ante! Again, they would have been roundly criticized if they'd prioritized severance (which means more for the highly paid) and preferred stockholders over their rank-and-file common holders.

> Unemployment benefits don't come anywhere close to tech salaries! They take time to process

You're arguing for special treatment of well-paid tech workers over e.g. truck drivers [1].

> What is in my power to control is to avoid working with anyone associated with this decision and encourage everyone else to do the same

The solution is to not work for a start-up. That, or gain empathy for the tens of millions of Americans who work for a restaurant or with variable hours or on contracts that provide them with zero heads up when business conditions change or their employer goes under.

[1] https://www.wsws.org/en/articles/2023/08/09/51c3-a09.html

[ditonal]

So tired of companies that raise hundreds of millions from some of the wealthiest and most powerful people in the world trying to pull the “we’re a startup” card. You’re not two dudes eating ramen in a garage and you don’t get to use that image to excuse your shitty behavior.

Also tired of the “other people in poverty are exploited even worse! You asking for basic labor protections shows your lack of empathy for them!”

I’m seriously having a hard time imagining any of this was written in good faith.

The real solution is, and always will be, collective bargaining. These VCs aren’t going to make sure you have healthcare. They could give it to you directly, or they could use their wealth and power to make sure the government gives it to you.

People ask “what can a union do? My office already has free kombucha”. Imagine if all the SWEs at all these VCs backed companies went on strike unless the laid off Convoy employees got six months of healthcare (it would have been in the initial employment contract). The money for this stuff would magically materialize. It doesn’t materialize because there’s no organization to advocate for it, it’s that simple.

[sangnoir]

> You don't know the odds ex ante!

No, you can simply choose your cut off time for a hail-mary at 2 months of runway, rather than 0 months of runway. Leaders don't have to rundown the clock (and bank balance) to 0 - they may choose to, like they did in this instance.

> You're arguing for special treatment of well-paid tech workers over e.g. truck drivers

Again, no. I'm arguing against your suggestion that the Convoy folks without severance are going to be alright because they have unemployment. I hope none of them are on H-1B visas as they just lost all control to when their clock starts ticking.

> The solution is to not work for a start-up

This is a false dichotomy. There are plenty of startups led by people who do right by their employees; I have worked with some before of them, and I will not hesitate to work with them again in the future because I trust them not to screw me over like this.

[fsckboy]

>millions of Americans who work for a restaurant or with variable hours or on contracts that provide them with zero heads up when business conditions change

wouldn't you consider your statement itself to be a giant heads up, right now? Heads up! save some money, don't spend everything you earn. And don't tell me you didn't get a heads up.

[bhhaskin]

That is the risk of working at a startup as an employee though. If you aren't willing to take that risk don't work at a startup.

[kortilla]

Don’t join a fucking startup if you can’t handle it shutting down at any given moment.

If you want employment stability join a profitable company or the federal government.

> That'd be a win/win, except for the leadership who would rather gamble using other peoples chips but keep most of the winnings.

It’s a startup! You’re there to try to make the options work out as an employee as well. I would 100% rather ride to the end with any chance that it will take off.

They failed to get a loan in time, it’s not like they knew it was a fantasy that could never work out. They had a viable business and got caught in counter-party risk.

[eru]

> Everyone who lost their jobs at Convoy is eligible for unemployment. The same unemployment most workers get when they're fired. Perhaps the discussion should be around improving this benefit for everyone?

I think you can take out private unemployment insurance, if you are worried about that? (Or just have savings.)

[webdood90]

> Perhaps the discussion should be around improving this benefit for everyone?

Red herring

You're participating in mental gymnastics to validate what is essentially poor leadership. Why?

[suoduandao2]

You’re calling this poor leadership, can you share a time you were in a similar situation and did something different or are you armchair quarterbacking?

[JumpCrisscross]

> to validate what is essentially poor leadership

We don't have enough information to know if it was reckless leadership. If the CEO had an email from a reputable lender saying we'll have funds in your bank account in two weeks, it would have been irresponsible for him to shut down the company to pay off creditors, preferred shareholders and severances.

I'm not advocating for the CEO. Just against condemning him while in the maelstrom. More fundamentally, there is a thread through this discussion which essentially holds that tech workers--we're highly paid!--should have post-termination benefits others don't.

[hluska]

You responded to that with even more mental gymnastics - this time a ‘reputable lender’ who will jump in with an emergency loan then run off.

Then you’ve thrown in another red herring claiming this thread argues that tech workers should have more options. Nobody said anything close. Rather, the argument is that letting your company run down to zero is irresponsible.

[vidarh]

The problem is you don't always know it's doomed. A company I co-founded got to within 5 days of insolvency before we secured the next $5m round. The company never got a big exit, but it did sell a few years later, and the product still exists 22 years after.

I think the big question is how well communicated the risks are. In our case I believe everyone knew, and there'd have been no hard feelings if people had chosen to look for new jobs once funds got tight.

[rdl]

FedEx famously got to within days of running out of money early on, and there is a story Fred Smith made payroll by taking the remaining cash to Las Vegas and gambling.

[addicted]

Weren’t they trying to get a cash infusion through an acquisition? Seems like they failed and ran out of money.

[stuaxo]

This is why you need laws.

In other countries they would have to pay the salaries.

[yellow_postit]

We have laws. There’s a trade off between more vibrant economies (easier to start, fail, start again) and more stagnant ones (harder to start but more safety nets).

There’s no perfect set point and the trade offs will always have downsides.

Given the risks of working for a company in the stage Convoy was in I’m not exactly sure this is a bad outcome.

[mrcwinn]

>choose to invest more to pay severance

Deploying capital into something that literally has no return just doesn't make sense. You're also ignoring the reality that most capital comes in at the start. It doesn't come in at the end. That's an irrational investment. Would you buy a house that's burning down in the interest of the current homeowners?

Could a company receive funds at the end? Legally, sure, maybe (maybe not given fiduciary duties to LPs).

Investors would have to say to their limited partners: we're going to take your money, and hand it over to employees, and those employees will do no work for us and the company is shutting down anyway. That's a very ineffective use of capital and those types of decisions are worse in the end for the economy, I would argue, which does impact everyone.

Startups are risky for investors. They're risky for employees too. I think a better solution might be to bolster unemployment insurance. After all, investors often have downside protection (usually in the form of preferred shares or preferences). Employees need downside protection too. But let's not perverse how capital should work.

[clutchdude]

> That's a very ineffective use of capital and those types of decisions are worse in the end for the economy

Disagree - it frees those employees to begin working for more productive companies sooner rather than drag them through "you are fired with no provisions for healthcare. Good luck and don't get sick during the donut period."

- yes, it's an special qualifying trigger for the exchanges but you are asking someone navigate this in short order(likely end of the month or less than two weeks)

[datadrivenangel]

Disagree to disagree - employees are free to begin working for more productive companies when they're fired with no provisions for healthcare.

In spirit though, I agree. Social healthcare not tied to employer would allow for more labor mobility. These transitions should not abrupt or catastrophic ideally.

[clutchdude]

> Disagree to disagree - employees are free to begin working for more productive companies when they're fired with no provisions for healthcare.

But that's a bad thing - because once your employment tied healthcare abruptly ends, you scramble to get something to restore it.

This may include settling or taking less optimal jobs or accepting a lower paying job.

[cheriot]

Employee claims supersede equity and debt holders. The question is whether the company shuts down with money in the bank or keeps running until it's out.

People should remember the board and CEO for screwing over employees.

[somic]

My understanding is that in the US, earned wages (while employees were employed) are indeed employee claims. Not paying these is what YC guidance above says will lead to "very bad things."

After people are let go, severance and continuation of healthcare beyond some term mandated by law (maybe state, maybe federal, maybe varies by state, don't know) are not considered employee claims in this sense.

CEO and the board didn't follow the YC guidance mentioned above, and it's on them.

[_jal]

>People should remember the board and CEO for screwing over employees.

This is important if you're staying in more or less the same field - many specialties are smaller worlds than you may think.

I am somewhat bad with names, so I've learned to take notes. I have a list of people I'd love to work with again, and another of people whose presence will stop me from accepting an offer.

[stickfigure]

> choose to invest more to pay severance

This is not a thing that happens in reality.

[thisisbrians]

No; the fiduciary duty of the CEO/board is to the shareholders. If there is a chance to salvage continuity of operations and preserve the value of equity, that is what they will do, even if it means operating until cash runs out. It is a matter of basic incentives. As much as we'd love to do the "right thing" and pay weeks/months of severance for no work (I am a founder myself and would love to, in a perfect world), startup employees should know the risks of working at a high-risk venture and plan accordingly. The middle road here is to do a significant layoff with severance, but this isn't possible in every case. Additionally, a company-saving customer contract or funding round can fall apart at any moment. This is, unfortunately, just the nature of the business.

[paulddraper]

Technically true, but no one is going to make a zero ROI investment.

Severance for companies with an ROI are one thing. Severance for a failed company is quite another.

[balderdash]

Ehh, talk to a lawyer, but at certain point, often before technical bankruptcy/insolvency, mgmt/board actually have an obligation to the creditors, not shareholders (as they are no longer the beneficiaries)